Mission Investor

I wrote the following letter, supporting fossil fuel divestment at Macalester College, and a statement a number of fellow alumni signed to get Macalester College to strongly consider divesting and taking national leadership, once again, on sustainability. It isn’t just what you invest in, but what you won’t divest in, that makes Mission Investing such a powerful tool for social change. – Richard

M E M O

To: President Rosenberg and the Board of Trustees
Macalester College

Dear President Rosenberg and Chairman Deno,

As a clean energy entrepreneur, I can attribute much of my success in helping with the launch clean energy companies like Solar Mosaic and Ethical Electric, with the positive experiences I had collaborating with fellow students, faculty, and your administration launching the Clean Energy Revolving Fund, our Green Building Advisory Committee, and our National Student Design for Sustainability award-winning green roof projects.

As a co-founder of the Macalester Conservation and Renewable Energy Society, I saw Macalester become a national leader in campus sustainability and renewable energy. Over the next several years, I watched the students I worked with on-campus become leaders locally, nationally, and yes, globally.

Alumni who led on those initiatives, as students, have since accomplished the following: built the largest solar photovoltaic array in Scandinavia, founded the largest Solar Thermal developer in the United States, organized the 12,000 person strong Power Shift climate conference, led online organizing for the 17,000,000 person Global Campaign for Climate Action, worked on nano-tech solar panels, and so much more.

Macalester’s leadership and those incredible students are now alumni encircling the world, working to change it as global citizens. At the international climate negotiations, I worked with Kofi Annan’s TckTckTck climate campaign and met many Nobel Prize Winners, including the late Wangari Maathai, who delivered our petition, in Copenhagen, to the assembled presidents and prime ministers. However, the two people that most impacted me were Archbishop Desmond Tutu, of South Africa, and President Mohamed Nasheed, of the Maldives.

President Nasheed, when he met with us, after flying in from a country that many have described as paradise on earth, his voice cracked as he described how they were losing whole islands bit-by-bit every year and he was tasked with figuring out how to evacuate or save his country. He asked us to make sure any treaty was strong enough, so he wasn’t forced to sign what would end up being a suicide pact. We had launched an effort called Project Survival and the students with us got 124 countries to sign a pledge to protect the survival of all nations and peoples from climate change.

Fossil Fuel companies derailed those talks, however, and Archbishop Tutu was the one who gave us the guidance on what kept hope alive during the darkest days in South Africa, when activists were attacked and violence broke out against everyone calling for an end to apartheid. The knowledge that students, like those at Macalester today, were standing in solidarity to fight for them and that the companies profiting from business in South Africa were under pressure, every moment they let Apartheid stand.

We are at such a moment today.

In the wake of Superstorm Sandy, record drought across the Midwest, raging wildfires in the West, and freak storms like the Derecho tearing across the country at 600 miles perhour from Chicago to Washington, D.C. Climate change is no longer a hypothetical problem, still constrained to the whiteboard in Olin-Rice. It is a problem of now, one that the students graduating today will spend decades coping with. The current path we are on, with a six degree Celsius rise in temperatures, leads to projections from the National Academy of Sciences that sound like science fiction, of the dystopian variety.

However, divesting from Fossil Fuels can be done with effectively no risk and perhaps major gains for the financial future of the college, as well as launch careers of recent graduates into new opportunities in sustainable finance. As Tom Steyer, who along with his billionaire colleagues Michael Bloomberg, James Simons, Jeremy Grantham, and Julian Robertson, have funded major efforts on climate, said in Rolling Stone:

“From a selfish point of view, it’s very good for colleges that they know something about the future that others don’t. Because investing is not about what’s happened in the past – all prices are really anticipations of what’s going to happen in the future. As soon as the trouble we face is really common knowledge it’s going to be reflected in the price. But it’s not reflected in the price yet.”

Moreover, as a clean energy entrepreneur, who has watched my Macalester classmates have similar success starting and launching businesses in clean energy and sustainability, I know there are incredible opportunities to invest in making the future a better place.

When I divested my entire holdings in Fossil Fuel companies, I did so a year before the Deepwater Horizon explosion wiped billions, in a day, off the value of BP. I had invested in green technology and clean energy and to this day, I have outperformed my peers. Our Clean Energy Revolving Fund had an annualized ROI of 26.5% and the 52 funds on colleges across the country have performed at around 28-30%.

Once you explore this topic, the reasons are diverse as to why to divest from Fossil Fuels and reinvest in clean energy and sustainability, but the simplest is the most important.

Climate Change is a matter of life and death for millions of people and it is immoral to profit from companies who stand in the way of solving the problem.

Thank you for your thoughtful engagement and I hope this letter and the attached statement signed by Macalester Alumni moves you to weigh in and decide to act.

Richard Graves ’06

We, the undersigned, call on Macalester College to once again rise to the call of action from its students and in what has become a hallmark for Macalester, take innovative and decisive action to divest from Fossil Fuel companies and reinvest in clean energy solutions to climate change.

Richard Graves is the author of this blog and is currently VP of Business Development for Ethical Electric, among other projects he is engaged in.

What is a social movement enterprise? In my definition, a social movement enterprise is an organization that aligns their commercial function with a larger social movement for change, by directly contesting for social or political change through the operations of offering their product or service.

What does that mean and how is it different? There are many social enterprises and social movements around the world, seeking to provide services that benefit the world or mobilize enough collective action to create the change they want to see in the world. However, while many social enterprises seek to directly create social change and share staff or aims with a wider social movement, it is much less common for an enterprise to service or seek to support a social movement in its efforts to build a mass mobilization for social change.

Why does this matter? As the field of mission-related investment has grown and evolved, you can now find investments dispersed widely across the world and on all kinds of issues, from education, clean energy, sustainable food, clean water, and microcredit to medical service delivery. Many of these social enterprises have taken on functions previously delivered by aid agencies, international donor groups, or charities. The field of advocacy, from lobbying operations in western capitals to grassroots campaigns, has been seen as less likely to generate returns or ripe for investment by philanthropists and donors. While advocacy has been a lucrative field for for-profit lobbyists and political campaign consultants, they have often been in service to corporate interest groups or political parties, not social movements.

I believe that Social Movement Enterprises are investable, viable and incredibly high leverage, with the potential to offer market-rate returns while using their brands, marketing reach, and revenues for advancing the aims of a social movement. Critically, for investors that are also donors and seeking to generate additional funds for advocacy of causes, it opens the potential for using investment dollars into sustainable, return-generating companies that do organizing and advocacy and can grow and scale to respond to social challenges too large for current donor resources.

Before this is called to good to be true, there currently exist real world examples of social movement enterprises, even if it appears to be an admittedly sparse field. In the United States, there are a number of enterprises I have identified that share this mix of commercial services and offerings, an embrace of organizing for advocacy and change as an essential element of their business model, and alignment with a larger social movement for change. CREDO Working Assets and the Better World Club as examples of progressive social movement enterprises, Homeboy Enterprises as an example of an anti-gang social movement enterprise.

This is a guest post by Sonja Swift, the Family Philanthropy organizer for Resource Generation and a NextGen Fellow in Mission Related Investment.

Traditional philanthropy is based on a very simple notion: make as much money as possible with the foundation’s endowment and give away grants to address social problems. Meaning that 95% of the endowment is invested in whatever will bring in the highest return, while the other 5% is donated annually. For the entire 100+ years of philanthropy’s existence this has been the accepted model; premising the field of philanthropy entirely upon the mere 5%.

I’ll be the first to admit this never made much sense to me.

Turns out that this premise is now being challenged even from within the original philanthropic institutions. “This works in a world where two assumptions hold true,” explained Antony Bugg-Levine, Managing Director at the Rockefeller Foundation during the first MRI Fellowship learning call, a year long learning series on mission investing organized in partnership by Resource Generation and Confluence Philanthropy. “And these assumptions have been taken for granted to the point no one articulates them. They are that 1): the only way to address social issues is through charity. And 2): the only reason to invest is to make money.”

Impact or Mission-Related Investing (same idea, different lingo: investing with values intact or more specifically, in alignment with the philanthropic mission) fundamentally rejects those assumptions. The assumption is instead that for-profit can be economically sound while also addressing social issues. For traditional philanthropy this is a paradigm shift. “This has profound implications for philanthropy. Do not underestimate how disruptive this new truth is to existing systems of philanthropy,” furthered Bugg-Levine. Foundations have a fiduciary duty to use their assets mindfully and in line with their mission. When the notion that this mandate only applies to the grant dollars looses ground a lot of money comes into question.

The total amount of grant dollars flowing through the Environmental Grantmakers Association in 2008 amounted to approximately 600 million dollars.[1] Seems like a lot, no? But British Petroleum spent the same amount that same year on biofuels research alone. This is what philanthropy as purely grantmaking amounts to: not enough. On average foundations lost 40% of their endowments by spring of 2008, yet tales tell that foundations employing an MRI strategy lost more in the range of 10-20%. The 2010 report Socially Responsible Investing Trends in the US report findings convey a similar scenario, making a solid case for how prudent this kind of investing is especially amidst tumult.

I am currently participating in the NextGen Fellowship in Mission Related Investment with Resource Generation and Confluence Philanthropy. And you know what? There are a billion .pdf reports on the subject, but what I really wanted was a page with links to new articles on the subject and all my ... Continue reading →

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